Message from the ABA Chairman Regarding COVID-19
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ABA Newsletter May 2020
Message from the ABA Chairman
Regarding COVID-19
I hope you, your colleagues and your respective families are all keeping
safe and healthy amid the ongoing COVID-19 pandemic. The pandemic
has certainly brought unprecedented difficulties globally, shutting down
businesses, severely affecting livelihoods, and adversely disrupting personal
lives. Indeed, in these extraordinary times, we are all navigating through
uncertainties for ourselves, our loved ones, and our respective communities.
However, I am pleased to note that many of you are instituting
measures aimed at minimizing the negative impact of the pandemic not only
on your business operations but also on the markets that you serve. Several
member banks are reportedly working with their respective governments in
implementing stimulus packages to help confront the economic challenges posed by the COVID-19 situation.
The ABA hopes to somehow assist you in this endeavor by providing you access to webinars conducted by
our Knowledge Partners aimed at helping organizations tackle the consequences of the
pandemic and attain business continuity during the crisis.
Looking forward, I hope that, amidst the continued uncertainties brought about by COVID-19 – and
as some countries begin to gradually re-open some sectors of their economy - the health and safety of your
customers, employees, and the communities that you serve will remain one of your priorities, and that you
will continue to proactively implement precautionary measures in compliance with the new guidelines from
your local authorities in order to achieve this objective. I also hope that, despite the limitations the ongoing
crisis has placed on your resources, you will continue to pursue activities to further enhance the value of
your organization to your stakeholders and your community, to help rebuild business confidence, and to
ultimately achieve economic recovery.
Let me take this opportunity to once again thank you for your continued support of our Association,
and I look forward to seeing you all again in our next Conference.
Jonathan Alles
ABA Chairman
1
ABA Newsletter May 2020
Table of Contents
ABA Announcements ....................................................................................................................................................... 4
Boston Consulting Group Issues 3rd Edition of Perspectives on COVID-19
Steptoe & Johnson LLP Share Chart of OFAC Licenses for COVID-19 Relief and Humanitarian Activities
EN Bank assigns new representative on ABA Board
Training and Education .................................................................................................................................................. 6
Fintelekt-ABA Webinar on Sanctions: Key Takeaways
Fintelekt to hold Webinar on Ultimate Beneficial Ownership in June
Oliver Wyman Holds Webinar on COVID-19 Financial Policy Responses, Libor Transitions
ABA Members Invited to Attend EFMA Weekly Webinars
News Updates ................................................................................................................................................................... 9
World Bank Predicts Sharpest Decline of Remittances in Recent History
COVID-19: This is how Asia-Pacific is Emerging from Lockdown
IMF says Economic Outlook Worse than its Latest Forecast
More Asian Banks seen Avoiding Coal Projects
Global Economy could Shrink 8.3%, Deloitte says
UN Forecasts Pandemic to Shrink World Economy by 3.2 percent
Special Features ............................................................................................................................................................... 13
How Bad is COVID-19’s Impact on Asian Developing Economies?
COVID-19 Has Exposed the Weakness of Tradititonal Risk Management Strategies
Among Member Banks ................................................................................................................................................... 16
Bank of East Asia launches simplified account-opening for SMEs and start-ups
State Bank of India decides to offer moratorium to NBFC on a case-to-case basis
MUFG to issue Japan’s first ‘coronavirus bond’
SMBC Group issues response to COVID-19
Mobile international money transfer services eased by Hana Bank
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ABA Newsletter May 2020
Table of Contents
BML disburses MVR 45 million for COVID-19 recovery scheme
Mongolia Trade and Development Bank approved as accredited entity by Green Climate Fund
PNB expands cash withdrawal service through RD Pawnshop
RCBC posts 821% growth in online, mobile business
DBS Bank joins blockchain trade-finance network Contour
HNB enables plug-and-play e-commerce revolution for businesses with launch of AppiGo
CTBC Financial Holding wins 3 major accolades at annual CSR awards
Bangkok Bank offers “loan payment holiday”, credit support for SME customers affected by COVID-19
Banking and Finance Newsbriefs .............................................................................................................................. 22
Hong Kong Regulator Warns of Fake Clone Bank
RBI Offers Bad Loan Relief to Banks
Japan appoints first female central bank executive director
Malaysia Finance Ministry says hire-purchase loan moratorium now compound- and interest-free
More Philippine banks waive remittance fees
Russian central bank will consider 100 bp rate cut in June, governor says
Central Bank of Sri Lanka further reduces policy rates to support economic activity
Taiwanese spending on credit cards falls 3% due to pandemic: FSC
Vietnam central bank mulls ban on purchase of convertible bonds
Publications ................................................................................................................................................................... 26
Futures Thinking in Asia and the Pacific: Why Foresight Matters for Policy Makers
Global Shortage of Personal Protective Equipment amid COVID-19: Supply Chains, Bottlenecks, and Policy Implications
Review of the ADB Clean Energy Program
3
ABA Newsletter May 2020
ABA Announcements
Boston Consulting Group Issues 3rd Edition of Perspectives on
COVID-19
The Boston Consulting Group (BCG) shared with ABA
members the “3rd edition of the integrated BCG Perspectives
document on COVID-19” to support them in navigating the
turbulent times brought about by the pandemic which “has
led to a global, societal crisis that needs to be addressed
collaboratively by leaders worldwide.”
According to BCG, the effects on the economy,
sectors, business, and society are extraordinary, and they are
challenging governments and business leaders globally to find
tailored answers to urgent and important issues.
BCG believes that to navigate through the crisis,
leaders need to take a multi-timescale perspective, preparing
their responses across three phases: (1) FLATTEN the spread
of the virus; (2) Collectively FIGHT the virus, preserve public • Current consumer sentiment suggests some willingness to
health and progressively reopen sectors of economy and society; resume activities post lockdown but not to pre-crisis levels
and (3) Prepare for the FUTURE. Organizations managing this (even with treatment)
change well, will emerge stronger from the crisis.Hereunder are • Economic forecasts point to severe downturn in 2020—
the major points of the report: global rebound to pre-COVID levels not expected before
2021
Many countries are starting to establish preconditions for • Total shareholder returns (TSR) have rebounded over the
a controlled restart, as COVID-19 continues to be a global last 20 days, most sectors still hit; there are clear winners
challenge to societies even in hard hit sectors
• Governments’ actions and societal adherence continue
to deliver results in flattening the curve, allowing us to To emerge stronger from the crisis requires fast, decisive
consider relaxation of lockdowns action; business leaders need to concurrently think across
• However, health care capacity (e.g. masks) and testing multiple time horizons
(e.g. currently unreliable serology) remain major issues • To navigate through the crisis, leaders can leverage real-
• Business preparation (e.g. health protocols; workplace time, high-frequency, leading indicators to understand
safety) and public response (e.g. revised social norms) are patterns and societal shifts
key to ensure a sustainable transition • Experience from prior crises suggests that winners innovate
to accelerate out of crisis and seek bold moves, e.g. M&A
Impact on economy, sectors, and business remains severe • We recommend nine action areas to business leaders that
in 2020; rebound to pre-crisis levels not expected by end of allow companies to emerge stronger
2021 • Winning the Fight’ improves odds to also ‘Win the Future’
• Length of ‘Fight’ phase dependent on many unknowns;
accelerated movement toward vaccine or treatment at BCG is an American management consulting firm
scale could limit ‘Fight’ phase to 12-24 months; data from founded in 1963. The firm has more than 90 offices in 50
therapeutics will emerge in a few months—drugs likely to countries, and is considered one of the three most prestigious
reduce severity of infection employers in management consulting.
• Estimating the economic, sector, and business impact
requires scenario-thinking to navigate the crisis
4
ABA Newsletter May 2020
ABA Announcements
Steptoe & Johnson LLP Share Chart of OFAC Licenses for COVID-19
Relief and Humanitarian Activities
Mr. Nicholas Turner from (e.g., Venezuela). Their shipments
Steptoe & Johnson HK LLP, who was may also be subject to the Export
a Speaker at the 36th ABA General Administration Regulations (EAR).
Meeting and Conference held in The chart provides a brief summary
November 2019 in Makati, Philippines, of humanitarian general licenses
has shared an interactive chart his firm (GLs) and license exceptions that
prepared summarizing OFAC (Office of may apply to COVID-19 relief
Foreign Assets Control) licenses that permit banks to process efforts and other humanitarian activities.
certain payments related to COVID-19 and humanitarian relief Steptoe has an international reputation for vigorous
efforts in Crimea, Cuba, Iran, North Korea, Syria, and Venezuela. representation of clients before governmtental agencies,
Exporters, non-governmental organizations, financial successful advocacy in litigation and arbitration, and creative
institutions, and individuals that are subject to US jurisdiction and practical advice in structuring business transactions. The
may require a license from the US Treasury Department’s Office firm is particularly noted for its capabilities in: (a) white-collar
of Foreign Assets Control (OFAC) to support COVID-19 relief defense and other government investigations and enforcement;
efforts in territories subject to comprehensive US sanctions (b) high-stakes litigation; (c) patent and technology litigation;
(e.g., Crimea, Cuba, Iran, North Korea, Syria) and territories (d) preventive international corporate compliance; and (e)
whose governments are subject to stringent US sanctions challenging regulatory issues before the US government.
Member Personality
EN Bank Appoints New Representative in ABA Board
Iran’s Bank Eghtesad Mr. Khan Mohammadi has been Head of FX Treasury
Novin (EN Bank) has & International Development Department at EN Bank since
appointed Mr. Jafar Khan March 2020. Prior to the position, he was the bank’s Senior
Mohammedi Fard, Head of Officer from 2005-2007 and Deputy Head from 2007-2014 for
FX Treasury & International FX Treasury and Accounting Department.
Development Department Mr. Khan Mohammadi holds a diploma in
at the bank, as its new accounting, having obtained his Bachelor’s Degree in
representative on the ABA Finance and Accounting in 1999. He studied Management &
Board. Entrepreneurship in Tehran University from 2010-2012 and
As a seasoned banker, graduated with a Master’s Degree. He has been pursuing a PhD
Mr. Khan Mohammadi has in Accounting in Azad University since 2016.
worked in a number of banks Mr. Khan Mohammadi received the Accounting
and financial institutions in Diploma Book-Keeping to Trail Balance in London in 2000. He
Iran. He was Head of FX became a member of the Association of Accounting Technicians
Accounting Department at Day Bank, Member of the Board (AAT) after obtaining his Intermediate Certificate in London in
at Day Foreign Exchange Company and Member of the 2001, and a member of the Association of Chartered Certified
Board at Kian Gostar Kish Co. from 2014-2017. From 2017– Accountants (ACCA) in 2002, following a course at the
March 2020, he served as Head of Treasury and Accounting Westminster University of London. He also became a Certified
Department. at Tourism Bank. Basel III Professional in Dubai in 2011.
5
ABA Newsletter May 2020
Training and Education
Fintelekt-ABA Webinar on Sanctions: Key Takeaways
The speakers dispelled the illusion that is is critical and calls for robust processes
often held by smaller banks that and technology. List management
the impact of sanctions, especially the processes and sound regulatory watch are
Office of Foreign Assets Control (OFAC) key for ongoing compliance.
sanctions, is restricted only to large banks. Quality data, up-to-date
Larger banks may have elevated risks, screening technology and the right
but smaller banks are equally vulnerable expertise are key components for
to sanctions actions and may need to productive sanctions screening
comply with sanctions despite the lack of The OFAC recommends that all
jurisdiction. Often correspondent banks or banks should have an agile and responsive
counterparties demand compliance. Banks sanctions compliance programme in place,
may also wish to avoid the reputational, which is updated and applied throughout
commercial and legal impact owing to the enterprise.
non-compliance, including from potential It is important to understand how sanctions
secondary sanctions. violations occur, and how regulators
The joint webinar on Sanctions The complexity in sanctions was interpret the banks’ processes if a breach
hosted by Fintelekt Advisory Services well brought out by statistics depicting were to occur.
and the Asian Bankers Association on the significant increase in the number of OFAC response to Covid-19
May 6, 2020 saw record participation to sanctions programmes as well as countries In response to the Covid-19
date, highlighting the growing importance enforcing sanctions in the last few years. situation and demands for relaxations
of the subject of sanctions compliance and Sanctions differ by sector on humanitarian ground, the OFAC is
the increasing complexity associated with and type of activity. Exceptions, encouraging companies to take advantage
it. authorisations and licenses may apply. of relief exceptions and provisions already
The webinar was moderated Secondary sanctions also subject non- built into sanctions orders through general
by Shirish Pathak, Managing Director, US persons to US sanctions law. OFAC and specific licenses.
Fintelekt Advisory Services. Four claims jurisdiction on activities involving Recently OFAC publicized
expert speakers shared their views on USD, US-origin goods and technology. Covid-19 related guidance which was
recent sanctions enforcement trends and Further, sanctions also apply to followed by FAQs on relief activities
implications on banks’ businesses, keeping entities not captured in the official list. that can be conducted for sanctions
track of frequent changes on global Especially in the case of OFAC, entities programmes like Iran, Venezuela and
sanctions lists and key considerations for owned 50% or more, directly or indirectly Syria.
banks’ sanctions compliance programmes. by sanctioned entities or individuals, are Arrangements such as the
Nicholas Turner, Of Counsel, also automatically sanctioned. Swiss Humanitarian Trade Arrangement
Steptoe & Johnson joined from Hong In recent years, other sanctions (joint effort with Swiss government for
Kong, Surendra Thapa, President & authorities such as the UK, European humanitarian trade with Iran) are likely
Founder, Global Intelligence Analysis Union, Australia and others have evolved to continue for humanitarian and relief
Corporation joined from the US, Vincent as strong sanctions enforcing bodies. activities.
Gaudel, Compliance Expert, Accuity All of these factors add to the
joined from France and Hala Bou Alwan, complexity, inconsistency and challenging
Founder & CEO, Hala Bou Alwan environment surrounding sanctions, even
Consultancy joined the webinar from the as regulatory scrutiny continues to rise.
UAE. Timely sanctions implementation
6
ABA Newsletter May 2020
Training and Education
Fintelekt to hold Webinar on Ultimate Beneficial Ownership in June
Fintelekt Advisory Services, a Choon Hong, Head of APAC Compliance
Knowledge Partner of the Asian Bankers Solutions for Bureau van Dijk, a Moody’s
Association (ABA), is set to hold a Analytics Company. Fintelekt Managing
webinar entitled “Ultimate Beneficial Director Shrish Pathak will serve as
Ownership Identification: Challenges moderator. Key issues to be discussed
and Best Practices” on June 10, at are as follows:
11:00am Indian Standard Time. • Trends in misuse of corporate
According to the Financial vehicles for illicit activities
Action Task Force (FATF), corporate • Common typologies and recent
vehicles such as companies, trusts, cases
foundations, partnerships, and other • Customer due diligence challenges
types of legal persons and arrangements, • UBO identification best practices
despite playing an essential and Participation certificates will be
legitimate role in the global economy, available for a fee to those who attend
are often misused for illicit purposes, the webinar or listen to the recording.
including money laundering, bribery Participants will be invited to complete
and corruption, insider dealings, tax a multiple-choice assessment. Once they
fraud, terrorist financing, and other pass, they will be notified via email of
illegal activities. For criminals trying to their eligibility to purchase Fintelekt-
circumvent anti-money laundering and ABA participation certificates, and sent
counter-terrorist financing measures, this is an attractive way to a secure online payment link. The standard fee is US$50 per
disguise and convert the proceeds of crime before introducing participant, though participants from ABA member banks can
it back into the financial system. Since implementation of avail of the certificate at a discounted fee of US$25. Certificates
the FATF recommendations on transparency and beneficial will be sent in PDF format via email within two working days
ownership has proved challenging for banks globally, this upon receipt of payment.
webinar will explore both the challenges and best practices in Those interested in registering for the webinar may
this area. do so at https://fintelektwebinars.clickmeeting.com/webinar-
The webinar will be led by two speakers: Debmalya ultimate-beneficial-ownership-identification-challenges-and-
Maitra, Senior Director of BFSI Chokshi Group, and Chua best-practices/register.
Oliver Wyman Conducts Webinar on
COVID-19 Financial Policy Responses
Global management consulting firm Oliver Wyman, an ABA Knowledge
Partner, hosted a webinar on May 13, at 4:00p.m. Eastern Standard Time (EST) that
focused on COVID-19 Financial Policy Responses, in a continuation on COVID-19
and the Impact on the US Financial System.
Speakers included Til Schuermann, Partner and Co-head of Oliver Wyman’s
Risk and Public Policy; Oliver Wuensch, Strategic Advisor for Sovereign/Public
Policy Practice; Douglas Elliott, Finance and Risk/Public Policy Partner; Elizabeth
St-Onge, Financial Services Partner; Tammi Ling, Financial Services Partner; and
Vivian Merker, Financial Services Partner.
7
ABA Newsletter May 2020
Training and Education
ABA Members Invited to Attend EFMA Weekly Webinars
Non-profit organization EFMA, a Knowledge Partner • How AI in general and FinXEdge can help make the
of ABA, has been holding weekly webinars for the month of processes more efficient and improve chances of conversion
May, of which ABA members are open to participate. For the May 19 webinar, EFMA will partner with
On May 6, EFMA, in partnership with Accenture, French firm Capgemini to host the World Insurance Report
conducted the Innovation in Insurance Webinar Series #2. 2020, which explores the impact of digitally social behavior
This is a regular forum for robust discussion and sharing of on the policyholders of today and tomorrow, and examines the
innovation best practice and experiences amongst the global changing trust equation between insurers and customers. During
insurance community to drive the industry towards becoming the webinar, speakers Elias Ghanem, Capgemini Global Head
an ‘Insurer of the Future’. The May 6 event was facilitated by of Market Intelligence and Financial Services; Seth Rachlin,
Paul Stanley, Accenture’s Insurance Strategy Lead for the UKI, Capgemini’s Chief Innovation Officer for the Insurance BU;
and features two of EFMA’s 2019 award winners, PZU and and Rene van der Poel, EFMA Senior Advisor, will discuss:
RGAX, who discussed – amongst other things - ecosystems and • How customers’ preferred modes for researching and
effective collaboration/partnerships, as well as how to move purchasing an insurance policy have created a new trust
customer journeys to appropriate tools in the digital era. equation between insurers and customers
• How insurers can successfully connect with well-informed
customers by offering the right products, at the right time
and via the right channels
• How insurers should transform into Inventive Insurers and
harness data to create hyper-personalized offerings and
provide experience-led engagement
• How Capgemini can help insurers undergo the necessary
On May 13, EFMA held a webinar with Edgeverve transformation
Systems on the topic “Restructuring and managing lending
and debt collection strategies in the time of COVID-19.” The
discussion was led by Praveen Kombial, Edgeverve Global
Product Head for Business Applications, and Urszula Wysocka,
EFMA Country Manager for Poland and Physical Channels
Council Director. The EFMA-Edgeverve webinar explored:
• How to responsibly lend and collect effectively without
suffering from poor customer experience For the May 26 webinar, EFMA and Mastercard
• How to engage with customer debts the way that works join forces to bring alive a bright new Global Executive SME
best for them ensuring they feel less pressured in these Banking Program full of new initiatives to serve and connect
unprecedented times SME Bankers worldwide. Titled “SME Banking Coffee: Online
• Real life challenges in the current lead management process session series on Partnerships #3”, the webinar will be hosted
• How FinXEdge can support you to benchmark your Covid by Lukas Dzuroska, EFMA Country Manager for the Baltics,
19 response by delivering the right assistance program by Nordics, Poland, Turkey, and Georgia.
having the right customer risk segmentation in place
8
ABA Newsletter May 2020
News Update
World Bank Predicts Sharpest Decline
of Remittances in Recent History
“Remittances are a vital source the poor.
of income for developing countries. The Remittance flows are expected to
ongoing economic recession caused by fall across all World Bank Group regions,
COVID-19 is taking a severe toll on the most notably in Europe and Central Asia
ability to send money home and makes it (27.5 percent), followed by Sub-Saharan
all the more vital that we shorten the time Africa (23.1 percent), South Asia (22.1
to recovery for advanced economies,” percent), the Middle East and North
said World Bank Group President David Africa (19.6 percent), Latin America and
Malpass. “Remittances help families the Caribbean (19.3 percent), and East
afford food, healthcare, and basic needs. Asia and the Pacific (13 percent).
Global remittances are projected As the World Bank Group implements In 2021, the World Bank
to decline sharply by about 20 percent in fast, broad action to support countries, estimates that remittances to LMICs will
2020 due to the economic crisis induced by we are working to keep remittance recover and rise by 5.6 percent to $470
the COVID-19 pandemic and shutdown. channels open and safeguard the poorest billion. The outlook for remittance remains
The projected fall, which would be the communities’ access to these most basic as uncertain as the impact of COVID-19
sharpest decline in recent history, is largely needs.” on the outlook for global growth and on
due to a fall in the wages and employment The World Bank is assisting the measures to restrain the spread of the
of migrant workers, who tend to be more member states in monitoring the flow of disease. In the past, remittances have been
vulnerable to loss of employment and remittances through various channels, the counter-cyclical, where workers send
wages during an economic crisis in a host costs and convenience of sending money, more money home in times of crisis and
country. Remittances to low and middle- and regulations to protect financial hardship back home. This time, however,
income countries (LMICs) are projected integrity that affect remittance flows. It is the pandemic has affected all countries,
to fall by 19.7 percent to $445 billion, working with the G20 countries and the creating additional uncertainties.
representing a loss of a crucial financing global community to reduce remittance World Bank
lifeline for many vulnerable households. costs and improve financial inclusion for
COVID-19: How Asia-Pacific is Emerging from Lockdown
Countries all over the world are enforce home confinement, will now
announcing their plans to emerge from ask citizens to adhere to four new basic
COVID-19-inflicted lockdown, and the regulations, including self-isolation for
Asia-Pacific region is no different. three or four days if they fall ill.
Even countries like Thailand and Vietnam, The country and has been praised
that have not suffered a heavy infection for its strategy to control the outbreak. But
rate or death toll, must now reckon with the fight against COVID-19 is not over,
the economic damage caused by the warned Jeong Eun-kyeong, Director-
pandemic, and are eager to cautiously General of the Korea Centre for Infectious
reopen their schools and get people back Disease Control and Prevention. “South
to work. Here is a roundup of measures countries earliest-hit by the coronavirus, Korea can return to the intensive social
announced from countries and economies announced an easing of social-distance distancing system at any time if the
in the Asia-Pacific area: regulations implemented two and a half situation worsens,” he said.
South Korea, one of the months ago. The country, which did not Hong Kong SAR’s Chief
9
ABA Newsletter May 2020
News Update
Executive Carrie Lam announced a partial will continue to be banned for a further But many businesses remain
easing of lockdown conditions. Cinemas, month. closed and the inevitable economic
bars, gyms and mahjong parlours, among The government will continue to damage brought about by continuing
other things, were allowed to reopen from monitor the infection rate as part of a four- curfew means a fragile, tourism-
May 8, and secondary school classes are phase plan to easing its restrictions. “Slow dependent economy will be put to the test.
set to resume on May 27. The limit on and steady. We are moving on cautiously At the southern end of the
public gatherings will double to eight and healthily,” said Natapanu Nopakun, Asia-Pacific region, the Australian
people. The government also announced deputy spokesperson at the Ministry of government met with state leaders to
plans to distribute reusable face masks to Foreign Affairs. discuss creating health protocols for a
all 7.5 million citizens. “COVID-safe environment” that might
Singapore – one of the hardest- allow widespread reopening of businesses
hit Asia-Pacific countries with 18,000 by early July.
confirmed cases – has initiated a de- New Zealand has already
escalation of its lockdown, beginning begun to loosen its lockdown restrictions,
with a reopening of traditional Chinese moving from level four to three, allowing
medicine outlets, with further phases to schools and certain businesses to reopen.
come. Both countries have been
Around 85% of the country’s broadly successful in their containment
cases have occurred among migrant efforts, with under 7,000 confirmed cases
community workers living in dormitories, and 96 deaths in Australia and under
and wider community transmission Nearby Vietnam was the 1,500 confirmed cases and 21 deaths in
remains low. first Southeast Asian country to lift its New Zealand. With both contemplating
Thailand, with just under 3,000 lockdown, on April 22. Its stringent exit strategies, it is suggested the border
confirmed cases and 54 deaths, gave the quarantining policy has made it an between them may soon reopen, to create
green light to restaurants, hair salons, golf exemplar on COVID-19 containment, what has been referred to as a “trans-
course and open-air markets to resume with only 237 confirmed cases and no Tasman travel bubble”.
activities on May 11. But alcohol sales deaths. World Economic Forum
IMF says Economic Outlook Worse than its Latest Forecast
The IMF says that the global “We know this crisis isn’t going
economic outlook has worsened away anytime soon,” she added.
since its latest forecast three weeks “Things can get worse. The
ago and the world can expect more health crisis has not been solved.”
waves of financial market turbulence. The IMF said in its World
Developing nations’ external Economic Outlook report on April 14 that
financing needs probably would be far global GDP would decline 3 percent this
above the US$2.5 trillion that the fund year. That baseline scenario assumed that
previously projected, IMF chief economist the pandemic fades in the second half of this A lengthier pandemic would
Gita Gopinath said on a May 7 Webcast year and that containment measures can wipe 3 percent off GDP this year
hosted by the Council on Foreign Relations. be gradually wound down, a scenario that compared with the baseline, while
The fund would need all of its looks less likely according to Gopinath. protraction plus a resumption next
US$1 trillion in lending resources and The IMF’s outlook also year would mean 8 percent less output
would not be shy about telling nations how sketched out three alternative scenarios than projected next year, the IMF said.
much support is needed, Gopinath said. in which COVID-19 lasted longer than Bloomberg
expected, returned next year, or both.
10ABA Newsletter May 2020
News Update
More Asian Banks seen Avoiding Coal Projects
More financial institutions energy system.
in Asia are likely to end their support Japanese trading houses, such as
for coal power projects after Japan’s Marubeni Corp., Mitsubishi, Mitsubishi
two largest institutional banks recently Materials, Mitsui and ITOCHU, are also
announced that they would stop financing divesting away from coal.
new coal-fired power plants, the Institute Tim Buckley, in his report titled
for Energy Economics and Financial “Southeast and East Asia Catching Up
Analysis (IEEFA) said. in Global Race to Exit Coal – Historic
Japan Bank for International Announcements Across Japan, Korea, This decision, added Buckley,
Cooperation and Sumitomo Mitsui China, and the Philippines Augur Well,” will make it “more difficult that it already
Financial Group and Mizuho Financial said a domino effect across other coal is” for coal developers to seek financing.
Group have joined Singapore’s United lending financiers in Asia is likely. In the Philippines, the power unit of
Overseas Bank, DBS Bank, and Overseas “Mizuho is the world’s largest conglomerate Ayala Corp. said last week
Chinese Banking Corp. in halting the private financier of coal developers which that it would “transition to a low carbon
financing of new coal power projects. means other financial lenders keep a portfolio and coal divestment by 2030.”
South Korea, meanwhile, is close eye on its activities,” said Buckley, “Ayala Corp.’s recent divestment
targeting zero emissions by 2050 as it IEEFA’s Director of Energy Finance of two coal-fired power plants and its
introduces an effective carbon tax and the Studies, Asia Pacific. “Now that they’ve investment in wind, solar and geothermal
phase out of domestic and overseas coal announced a coal exit which indicates is an important indicator for the region;
financing by public institutions. to the market that coal is a very poor corporations reading the energy transition
China released a draft policy that focuses investment, we expect other lenders to correctly are also moving away from
on building a low carbon, innovation- also announce a policy shift away from expensive coal,” Buckley noted.
driven, safe and efficient domestic clean coal,” he said. Business Mirror
Global Economy could Shrink 8.3%, Deloitte says
The global year, Deloitte said. content delivery network market might
economy Sales of smartphones might also grow faster, by 30 to 40 percent to US$15.5
could contract fall 7 to 10 percent this year, following a billion, from a 25 percent increase to
8.3 percent 40 percent slump in February. The firm US$11 billion. The demand for content
this year trimmed sales of artificial intelligence is higher than ever with video and video
due to the (AI) chips this year to 650 million units game streaming soaring 20 to 70 percent
COVID-19 pandemic, and smartphone worth US$2.2 billion, from its earlier due to lockdowns, school closures and
sales would likely shrink 10 percent, but projection of 750 million units worth people working from home, it said.
companies are pressing ahead with 5G US$2.6 billion. High-end smartphones, Meanwhile, advertising
deployment, Deloitte said on May 7. which are the biggest users of AI chips, spending could fall by 5 to 10 percent
The UK-based firm has been would be harder hit amid the pandemic, it for the year, compared with a 3 percent
tracking the effects of the pandemic on said. decline predicted in March, now that the
the global economy and major industries Deloitte maintained its forecast Tokyo Olympics have been postponed
in its Deloitte Insight reports. that more than 100 companies worldwide and lockdowns intensified.
Global GDP, in the best-case would be testing private 5G deployments According to Deloitte, the economy might
scenario, would be weak in the first this year, with multibillion-dollar start to emerge from the virus crisis in the
quarter and deteriorate further this investments in labor and equipment. fourth quarter.
quarter, contracting 8.3 percent for the The firm added that the global Taipei Times
11ABA Newsletter May 2020
News Update
UN Forecasts Pandemic to Shrink World Economy by 3.2 percent
The world economy is projected the spread as scientists rush to develop
to shrink by 3.2 percent in 2020 after the treatments and a vaccine. The U.N. report
coronavirus pandemic sharply restricted said the pandemic showed how economic
economic activity, increased uncertainty and public health “are inextricably linked
and sparked the worst recession since the and mutually reinforcing.”
depression, the United Nations said on “Countries may seek to reduce inter-
May 13. dependence, and shorten supply chains, as
A report by the U.N. Department many may consider the potential costs of
of Economic and Social Affairs said there a crippling pandemic too high relative to
would likely only be a gradual recovery of the benefits they receive from economic
lost output in 2021. In January, the department had projected integration and interdependence,” it said. “The fight against
world economy growth of between 1.8 to 2.5 percent this year. the pandemic — if it continues for too long and its economic
“The world economy is expected to lose nearly $8.5 trillion price becomes too high — will fundamentally reshape trade and
in output in 2020 and 2021, nearly wiping out the cumulative globalization,” it added.
output gains of the previous four years,” the report said. The report also warned that the massive loss of
The new coronavirus, which causes the respiratory employment and income due to the pandemic will exacerbate
illness COVID-19, has infected some 4.3 million people global poverty. “According to baseline estimates, 34.3 million
globally and more than 291,000 have died, according to a additional people — including millions working in the informal
Reuters tally. The virus first emerged in the Chinese city of sector — will fall below the extreme poverty line this year, with
Wuhan late last year. African countries accounting for 56 per cent of this increase.”
Businesses were shut down and hundreds of millions Associated Press
of people around the world were told to stay home to stop
Special Features
How bad is COVID-19’s Impact on Asian Developing Economies?
By David Dapice, Senior Economist at Harvard Kennedy School‘s
Ash Center for Democratic Governance and Innovation
In its April World Economic Outlook the International Malaysia, Thailand and perhaps the Philippines and India may
Monetary Fund (IMF) predicts a baseline case of negative 3 loosen controls in May.
per cent global ‘growth’ in 2020, rebounding to 5.8 per cent in The economic response in rich nations has been
2021. But it warns that things could get a lot worse. astonishingly large. The United States added trillions of dollars
Any economic forecast depends on how quickly the to a deficit that before the virus stood at US$1 trillion. The
virus spreads, how deadly it is, how effective social isolation Congressional Budget Office forecasts a deficit of US$3.7
and distancing are, and if treatments, herd immunity or vaccines trillion this fiscal year, nearly a fifth of GDP. The Federal
render it less destructive. We are still at an early stage of Reserve (the Fed), the EU Central Bank and the Bank of Japan
understanding these variables. There are hopes for a treatment are all going into overdrive, creating trillions of dollars, euros
this year and a vaccine next year, which would limit the time of and yen by buying debt or lending to banks. The Fed is going
economic shutdowns. further than the quantitative easing implemented a decade ago,
The impact in Asia depends on the length and severity even buying junk bonds to stabilise markets.
of control measures. China and Vietnam are slowly letting What are the implications for Asian developing
up while Singapore is tightening. Indonesia is prevaricating. countries and their economic management?
12ABA Newsletter May 2020
Special Features
The long-term economic impact depends on how
quickly the economic freeze ends and how extensive the thaw
is. Schools and stores may reopen as more spacing is created
and masks are used. But getting factories to work normally
again may require reorganising the workflow and spacing.
Tourism is likely to take much longer to recover.
Commuting may become more complicated and offices may
experiment with different working arrangements. People
may not spend as freely as previously, dampening demand.
There will be massive bad private debt as some companies go
bankrupt. Presumably, governments will bail out the companies
they deem viable or necessary and write off the debts of those
judged incapable of surviving. How this would work with
private banks is uncertain. State banks have done this before,
In general, developing countries do not have the same especially for state-owned enterprises.
deep and liquid bond markets that rich countries have. They There will be emergency loans from the IMF, World
often have to issue bonds in foreign currencies, especially if Bank and other groups, but they will not be nearly enough to
bond issuance exceeds the ability of local bond buyers to allow developing countries to respond as rich countries have.
absorb the new debt. This creates a dilemma (economists call Most workers in developing countries are in the self-employed
it ’original sin’) where the ability to use their own right to print or informal sector, which is of lower political priority to rescue
money runs into the fear that this will cause their exchange rate than the formal sector. There may be loan forgiveness, cash
to weaken and make it more difficult to repay debt. In trade- grants or food distribution schemes to soften blows.
dependent countries, this can also considerably boost inflation. On the other hand, the age structure of most developing
The bottom line is that there is limited fiscal space to countries is much younger than the rich ones and the virus
respond to emergencies like this virus. China could spend more appears most deadly to the elderly. This may allow developing
but seems reluctant to force large loans and deficit spending this countries to isolate the relatively few elderly and allow younger
time, unlike a decade ago. people to return to normal life sooner.
Some countries started in a fairly good fiscal position Meanwhile, the extended period of ultra-low or
with low deficits and debt relative to income before the virus negative interest rates on safe bonds will continue to drive a
hit. Singapore, Malaysia and Indonesia were in relatively thirst for higher-yielding assets, many of which will be issued in
strong positions, while Vietnam, Thailand and India had deficit- developing countries. The flood of liquidity will flow into many
to-GDP ratios between 6–8 per cent. But if nominal income is emerging debt markets, taking some pressure off countries that
growing rapidly — as it had been for Vietnam and India, but not manage the virus and the economic response well.
Thailand — the ratio of debt-to-GDP is still falling. Vietnam’s The virus will likely be a big setback but not
nominal income was growing at 10 per cent a year, so its debt- a permanent blow in itself, unless it further reduces the
to-GDP ratio was falling. If output falls sharply and the deficit willingness of nations to be open to flows of goods, people and
grows, this can reverse itself. A combined fear of bond markets ideas. There’s the danger for Asia and the developing world.
and limited fiscal space has prevented most Asian countries East Asia Forum
from increasing spending.
An additional consideration is the reliance of some
countries, such as the Philippines, on remittances from workers
abroad. These inflows are likely to fall dramatically, increasing
pressures on many families and the overall availability of
foreign exchange. The combination of falling remittances and
curtailed informal work during shutdown will increase poverty
and hardship.
13ABA Newsletter May 2020
Special Features
COVID-19 Has Exposed the Weakness of
Traditional Risk Management Strategies
By Dr. Mark Texler, CEO of The Climatographers
The COVID-19 pandemic demonstrates how could have done to manage its own risks.
vulnerable companies are to systemic risk events — and how The problem with COVID-19 has not been a lack of
limited our normal business risk management approaches are in dedication and expertise among health professionals; rather, it’s
these situations. In January 2019, the World Economic Forum the chronic shortfall in the political and budgetary prioritization
(WEF) and the Harvard Global Health Institute published of pandemic preparedness. Such preparedness need not have
a white paper about how businesses should prepare for a been overly costly; by one estimate, the global cost of being
pandemic. It recommended a number of steps companies can prepared for a pandemic like COVID-19 works out to $1-$2 per
take to prepare for infectious disease risks. person. That’s a trivial amount, in hindsight.
As shown in the chart below, “advanced” Business Needs to Advocate for Better Policies
recommendations included strong board-level leadership, Are there tools other than the typical risk management
active threat surveillance and active supply chain management. measures suggested in the WEF white paper that the business
These are all pretty conventional business-centric risk community could have used to ensure that pandemic
management strategies. preparedness was prioritized, funded and implemented? Sure.
The business community could have been a powerful
advocate for pandemic preparedness in policy and budgetary
decision-making. With the exception of the pharmaceutical
industry trying to sell its products, it’s fair to say that business
involvement in advocating for pandemic preparedness has
historically been very limited.
While systemic risk management has not historically
been seen as a business priority, COVID-19 has exposed a
material business risk that has been ignored. COVID-19 is
a wake-up call for businesses to recognize that they have a
legitimate risk management interest in promoting readiness for
systemic risks like COVID-19.
Apply the Principles to Climate Change
COVID Is a Systemic Risk A more proactive role for the private sector should not
Unfortunately, even the advanced strategies have be limited to the systemic risk posed by a pandemic. Climate
turned out to be totally inadequate in mitigating the business change, for example, comes immediately to mind. Climate
impacts of COVID-19. That is because a pandemic like change is a veritable petri dish for future systemic risk events
COVID-19 represents a systemic risk, requiring systemic including, coincidentally, pandemics. Even as we live through
preparedness and a systemic response. Traditional business risk the COVID-19 crisis, scientists are publishing reports of ancient
management doesn’t deliver either. viruses discovered in melting glaciers. They may turn out to be
In all fairness to business decision-makers, the the tip of a viral iceberg to which we have no natural resistance.
responsibility of preparing for and responding to a pandemic has Pandemics are just one of many systemic risk events that could
always rested with public health authorities. Given the ruinous be triggered by climate change. Others include:
business costs of COVID-19, however, and the failure of public • A drought that triggers an expanding geographical conflict
health authorities to effectively respond to COVID-19, we over water supplies. Conflicts over water in the Middle
should explore whether there was more the business community East, for example, have been suggested for years as a
14ABA Newsletter May 2020
Special Features
potential flash point for the next world war. These and other measures, however, represent corporate
• Simultaneous droughts in three of the world’s breadbaskets, social responsibility initiatives. Voluntary initiatives like these
disrupting food production, food prices and, ultimately, the cannot scale to the systemic change required to mitigate climate
global economy and political stability. That is the exact change. As a climate change mitigation strategy, they represent
scenario used by Lloyd’s of London for its seminal systemic “greenwishing,” at best, and “greenwashing” at worst.
climate change risk report in 2015. Mitigating climate change and, thus, the business risks
• An extreme event that triggers large-scale environmental of future systemic climate risk events requires a rapid transition
migration, exacerbating regional tensions and conflicts. to a low-carbon economy.
Systemic risk events like these, caused or worsened That, in turn, requires a broad suite of policies and
by climate change, could manifest at virtually any time. The measures to guide business behavior in that direction. When
likelihood of such events is also increasing as climate change it comes to policy advocacy for a rapid low-carbon transition,
progresses. however, the business community is missing in action.
Strong Business Case for Tackling Systemic Climate Notwithstanding numerous CEO expressions of support for
Risks climate policies, for example, U.S. Senator Sheldon Whitehouse
The literature looking at systemic business risks recently noted, “I am involved in a number of secret climate
associated with climate change is growing rapidly. The Bank conversations with some of my Republican colleagues, but they
for International Settlements’ recent report on so-called green can’t find a single corporation that will come out and say ‘I’ve
swans, for example, argues for a proactive role for banking in got your back.’”
anticipating and mitigating climate change-induced systemic Get Engaged in Climate Policy
risks. The failure of decision-makers to be prepared for
The business risk management rationale for engaging the COVID-19 pandemic, after years of warnings from public
at all levels in working to tackle climate-related systemic risks is health experts, will go down in history as an epic policy failure.
even more solid than is the case for COVID-19. First, business In hindsight, and given the catastrophic business costs of the
activities in the power, transportation and building sectors pandemic, it also reflects a failure of business risk management
account for a large fraction of the greenhouse gas emissions over foresight and initiative.
time that are causing the climate to change. Unlike COVID-19, There are lessons to be learned. Looking forward,
business is actively contributing to likelihood and severity of business decision-makers need to recognize the growing
systemic risk events. business risks of climate change-induced systemic risk events.
Second, imagine if investigative reporting were to reveal Given the role of business interests in contributing to climate
that business interests had actively interfered with pandemic change and the efforts to impede climate policy responses,
preparedness by lobbying against the necessary funding and whole sectors could lose their social license to operate.
could therefore be causally linked to the COVID-19 pandemic. Although it requires stepping outside their business
There would be public outrage — and rightly so. Yet when it comfort zones, companies should focus much more intensively
comes to climate change, business interests have a long history on growing their climate policy footprints than on shrinking
of obfuscating the nature and severity of the problem. Some their carbon footprints. That’s what business risk management
business interests continue to oppose the adoption of policies calls for in an era of climate change calls.
and measures needed to mitigate climate change, as is well Brink News
documented through the work of Influence Map in the United
Kingdom.
Voluntary Initiatives Cannot Scale
But wait, you may say. Haven’t thousands of companies
around the world committed to help tackle climate change
through initiatives ranging from reducing their carbon footprints
to adopting science-based targets, internal carbon pricing and
going carbon-neutral? Certainly.
15ABA Newsletter May 2020
Among Member Banks
Bank of East Asia launches simplified account-opening for SMEs, start-ups - Bank
of East Asia, Limited (BEA) announces the launch of CorporatePlus – Business Start Account, a
simplified corporate account offering convenient financial management solutions for small and
medium-sized enterprises (SMEs) and start-up companies.
The Business Start Account is open to new-to-bank corporate customers – such as sole proprietorships, partnerships, and
limited companies – which have been established for less than one year, were incorporated in Hong Kong, and have business
operations in the territory. To meet the needs of newly established companies, the account opening procedure has been simplified
and the requirement to provide business proof is waived.
Commenting on the launch of the Business Start Account, Ms. Shirley Wong, General Manager and Head of Personal
Banking Division at BEA, said “We are pleased to launch Business Start Account, an introductory business account with a simplified
due diligence process. We are offering SMEs and start-ups swift account opening and a convenient suite of banking services that will
take a lot of hassle out of their financing, so that they can place more emphasis on their business. We are keen to support blossoming
entrepreneurs who are essential to the competitiveness and diversity of Hong Kong’s business sectors.”
New customers who successfully open a Business Start Account will get a monthly service fee waiver for the first 36 months
(usually HK$150/month). Counter transaction fees will also be waived until 31st December, 2020. Business Start Account is an all-
in-one account that allows customers to access savings and checking account services, and place time deposits via a single account.
Customers can manage their finances anytime, anywhere through multiple electronic channels including Corporate Cyberbanking
through internet and mobile phones, as well as phone and ATM banking. Plus, expenses and working capital can be managed flexibly
via corporate cards, account cards and deposit cards.
BEA Newsroom
State Bank of India decides to offer moratorium to NBFC on a case-to-case basis - The
executive committee of the State Bank of India (SBI) board has approved extending the central bank
moratorium to shadow lenders, which will have to individually apply to avail the benefit.
Those eligible for the benefit will have to show a cash shortage to prove that they will not use the
relief to divert funds for other purposes.
SBI's decision could open the door for other public sector banks to also extend similar benefits to these lenders. Already,
Punjab National Bank (PNB) has communicated to its NBFCs clients about extending the moratorium.
Banks were earlier divided over the issue. While some started offering it from early April, SBI and several other large lenders
especially from the public sector were against it. So far, SBI had refused to extend the benefit to NBFCs, citing potential misuse by
these borrowers. It argued that unlike non-financial companies, NBFCs have not been totally hit by the lockdown.
SBI'S decision also follows an earlier Supreme Court order, which directed the RBI to ensure that its circular on loan
moratorium was implemented in "letter and spirit," increasing pressure on banks to extend the leeway to all borrowers without
distinction.
RBI on May 2 had conveyed to top banks that even NBFCs including microfinance firms and housing finance companies are
covered under `borrowers' to be eligible for the moratorium. The central bank also told them they could use their discretion to decide
the eligibility of firms based on their credit and liquidity profile. All these factors could now result in banks extending the relief to
NBFCs as well.
Economic Times
16ABA Newsletter May 2020
Among Member Banks
MUFG to issue Japan’s first ‘coronavirus bond’ - Mitsubishi UFJ Financial Group Inc.
(MUFG) plans to issue a corporate bond to raise funds for measures against the coronavirus, according
to informed sources. It will be the first “coronavirus bond” in Japan.
MUFG aims to raise some ¥60 billion through the bond, which could be issued as early as June. The proceeds will be
used to extend loans to financially struggling small businesses and help the development of coronavirus vaccines, the sources said.
The instrument will be a sustainability bond whose proceeds go exclusively to programs to tackle the environmental and
social issues. The megabank group also aims to utilize the funds from the bond for loans related to renewable energy projects.
MUFG hopes to lure funds by highlighting its active involvement in resolving social issues at a time when ESG investment, or
investment in companies with strong environmental, social and corporate governance principles, is drawing investor attention.
Plunging demand due to the coronavirus crisis has left many small businesses strapped for money. The government has
started providing a cash grant of up to ¥2 million to small companies whose sales have fallen 50 percent or more year on year.
Japan Times
SMBC Group issues response to COVID-19 - Sumitomo Mitsui Financial Group, Inc.
(SMBC) released a written statement in response to the ongoing COVID-19 pandemic.
The statement, published on May 1, begins with the company and all of its employees
expressing their heartfelt condolences and deepest sympathy to those people who have lost their lives
from COVID-19 and sincerely hoping the situation gets resolved soon.
Considering the significant impact on people’s lives and the economy caused by the outbreak, SMBC group says it strives
to ensure the health and safety of their customers and employees. It also pledges to support customers through financial services and
be committed to contributing to the medical industry and society overall. The company’s details their response is as follows:
1. Support customers through financial services
For corporate customers, SMBC has set up special funds such as the “Supply chain Management Fund” and “COVID-19
Special Fund” to strengthen their liquidity positions. For individual customers in Japan, in order to respond to urgent funding needs,
the bank is extending loans with special interests and providing flexibility by reviewing lending procedures and credit processes.
SMBC is also working to upgrade online services, and is currently providing services to credit card holders through mobile apps
2. Contributing to local communities and society
SMBC Group provides donation and support to medical institutions and related organizations, including:
• 500 million yen to Kyoto University’s Center for iPS Cell Research and Application to support the development of
vaccines and drugs
• 100 million yen to the Japan Committee for UNICEF to enhance medical and educational systems in emerging countries
• 100 million yen to the Association of Japanese Symphony Orchestras to support 37 orchestral organizations across Japan,
for the promotion of culture and the arts
• “SMBC at HOME” campaign to allow individual and corporate customers to make donations through the internet banking
service.
3. Prevention of the spread of infection and initiatives for continuous business operation
Acrylic boards have been installed at SMBC bank branches to prevent virus spread through droplet infection. Staff at call
centers and operational offices are being separated into two or more teams, and apart from those who need to be physically present
at the office, most are enabled to telework or stand by at home.
As a global financial group, SMBC Group promises that it will continue to fulfill its social responsibility through multifaceted
and flexible initiatives to support recovery from COVID-19.
SMBC News Release
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